Editorial: House hike needn't mean rates hike

Valuations whose triennial increase soared as high as 44 per cent in the Maungakiekie-Tamaki Local Board area. Photo / Thinkstock

Council has options other than loss of key services

An Auckland property revaluation exercise is always a double-edged sword. This week, the latest edition found property values in the city had risen an average 33 per cent over the past three years. The assessment, the forerunner to the release of individual valuations in November, could have been expected given the resurgence of house prices after the recession. Property owners, nonetheless, would have appreciated this confirmation of the increased value of their major asset. Much less welcome, however, is the thought that the surge in value could be the precursor of a big hike in council rates from next July.

This need not happen. Each property owner's share of rates is, in fact, affected by several factors. These include the level of the uniform annual charge and targeted rates and business differentials, as well as property valuations. The first three can be used to reduce the impact of valuations whose triennial increase soared as high as 44 per cent in the Maungakiekie-Tamaki Local Board area. Also open to modification is the total income from rates needed to fund the Auckland Council's activities and services. The council must resist the urge to use the property revaluation as an easy alternative to cutting its own spending.

Ratepayers now have greater reason to take a very close interest in the council's long-term plan for 2015-2025, the first draft of which is imminent. Fortunately, early indications suggest the mayor, Len Brown, is determined to keep rate rises to a minimum. But that would require spending cuts on a scale never before witnessed in Auckland. As much as $486 million a year in savings must be found to hold rates to an average 2.5 per cent increase.

Potential cutbacks already in the public domain include reduced library hours, an end to inorganic rubbish collections, deferred public transport and road projects, fewer arts and culture festivals, and reduced mowing of parks and street cleaning. Inevitably, this has been met, justifiably in some cases, with criticism. But many of the critics would be equally vocal if rates were not kept at a level they consider fair.

The slicing of almost half a billion dollars off the $2.86 billion City Rail Link, through the scrapping of its deepest station and the postponement of new trains, will further the savings. But there are big-ticket infrastructure items that are must-dos, not least stormwater and wastewater work which has $3.6 billion allocated to it. Most Aucklanders would also look askance if there was too great a delay to measures aimed at easing traffic congestion.

That, in turn, focuses attention on Mr Brown's favoured options to keep Auckland developing at a pace that would not be possible under the restrictions imposed by a low rates strategy. These include a transport levy on rates, roading network charges, such as congestion charging, and using public private partnerships. All have potential snags, not least the patchy record of public private partnerships here and overseas and the Government's opposition to road charges.

The immediate focus, however, will be the more contentious of the proposed spending cuts. Some of the targets help to provide the glue that binds an increasingly diverse community together. They are too important to cull. But the 10-year budget also mentions reduced planning, policy, research and monitoring functions. That, along with minimising staff and enhanced efficiencies in other areas, should be pursued. A selling-down of some assets, whether airport or port shares or carparking buildings, should also be up for consideration. Better that than either crippling rate rises or a loss of council services.